An economic forecast points to more revenue growth in Napa’s burgeoning hotel industry – but housing advocates see trouble in a trend they said will worsen the city’s already acute housing shortages.
If developers build out 60 percent of the 2,112 new hotel rooms proposed within the city, Napa hotel employment would rise by about 630 workers, according to a report presented to the City Council this week. The city’s hotel-based businesses would then employ about 3,700 and produce some $456.4 million in annual economic output, adding further muscle to a revenue source that already covers one-quarter of Napa’s annual budget.
But the thoughts of some council members – not to mention those urging the city to bolster an exceptionally tight housing supply – were more on the difficulties of accommodating hundreds of new workers rather than on the potential boon to city coffers.
“Any new hotel, in my view, will have to show how they will deal with housing for the workforce they bring in,” Mayor Jill Techel said in response to the forecast. “It’s a good problem to have, but it’s a problem we have to deal with to figure out what is the right mix for us.”
So concerned was council member Peter Mott that, in a letter to the editor to the Napa Valley Register written before the council meting, he suggested a temporary moratorium on hotel approvals while the council studied housing.
He did not, however, end up calling for such a pause at Tuesday’s council meeting. He later told the Register that a moratorium is more complicated to impose than he had originally expected and he plans to have his staff study the process more carefully before raising it officially.
The lodging industry report, jointly written by Cushman & Wakefield and BAE Urban Economics, illustrates the steady gains made by hotel operators over the past decade.
Occupancy rose from 66 to 71 percent from 2007 to 2017, while the average room rate grew from $255 to $323 a night during that span. During the decade, the city became home to 683 of the 917 new rooms and suites added to Napa County’s hotel supply – with much of the growth coming in the form of the downtown Andaz and Archer, along with expansions of the Meritage Resort and Spa in south Napa.
Moreover, city hotels have bolstered their popularity outside of the traditional summer and early-fall peak seasons, with occupancy now dipping under 60 percent only in the rainy winter stretch of December and January, according to the study.
Whether Napa’s housing stock can keep up with rising hotel employment, however, remains uncertain. Report authors forecast that the additional staff required for a larger lodging supply in the future would require 324 housing units, of which 233 would need to be affordable for families with moderate or below-average incomes.
Keen competition for local housing has pushed average home sale prices in Napa above $650,000 and monthly rents to the $1,700 to $2,900 range, even as the city estimates that one-third of families already living in Napa make less than $50,000 a year.
“As we build hotel after hotel after hotel, that housing is being built so we can build more hotels,” said Chuck Shinnamon of the Napa Housing Coalition. “What are we doing? We are building more hotels and a significant number of (workers) are lower-income.”
“We seem to be losing who we are. Slow down; we need a conversation about who we are and where we’re going.”
Resident Cindy Watter compared her affordable Old Town home purchase in 1990 to a recent $1 million-plus sale in the same neighborhood, and worried about the future of households of modest means in Napa.
“I fear that down the line we could become a little like Yountville, which is having difficulty filling its own elementary school,” she told council members.
Also on Tuesday, Napa edged toward letting voters decide whether to raise the city’s hotel room tax 1 percentage point, to 13 percent, and steering the additional revenue toward affordable housing programs.
The council instructed staff to draft a measure increasing the transient occupancy tax charged to hotel guests and is expected to vote June 19 whether to place it on the Nov. 6 ballot. At least two-thirds of voters must support the tax to put it into effect.
Register Editor Sean Scully contributed to this report.